January Car Sales Fall Nearly 2 Percent

DAVID RUNK

Published 7:00 pm, Sunday, February 2, 2003

Associated Press Writer

The automotive industry reported Monday that U.S. vehicle sales fell 1.8 percent in January from the same month a year ago, following an incentive-led sales blitz that drew buyers into showrooms in the final days of 2002.

The results came amid expectations that a hangover from December and a potential war with Iraq would lead to a sluggish start for 2003 sales. But analysts said the industry held up better than expected after low-financing rates and other incentives boosted sales 15 percent in December.

"You did have relatively good consumer spending in January," said David Healy, an analyst with Burnham Securities Inc. "I think the lower prices, higher incomes and ease of buying a car is helping."

General Motors Corp.'s sales were off 2.5 percent compared with January 2002, while Chrysler Group sold nearly 12 percent fewer vehicles. But Ford Motor Co. bucked the trend, reporting an increase of 4.8 percent as its redesigned Lincoln line showed strength.

European vehicle makers were hit in the month, showing sales down about 5 percent from the previous January. The major Asian companies saw their sales ease about 1 percent, propped up by American Honda Motor Co.'s 6 percent sales increase.

Sales of Ford, Lincoln and Mercury brand cars were up 8.7 percent compared with the same month in 2002. Light truck sales _ including pickups, sport utility vehicles, vans and minivans _ rose 3 percent. Lincoln sales were up about 24 percent.

Industrywide, U.S. sales were 1,070,211 in January compared with 1,089,828 in the first month of 2002, excluding BMW of North America and Daewoo International, which didn't report sales Monday.

"Our goal is to increase market share in 2003," said George Pipas, Ford's top sales analyst. "There is a long way to go and much work to do, but this is a good start."

Sales fell for Ford's Jaguar and Land Rover units. But Ford's Volvo unit saw sales jump 13 percent from a year ago on the back of its XC90 SUV, which last month collected an award from automotive journalists as the 2003 North American Truck of the Year.

Questions remain about what effect the tensions with Iraq are having on the industry and how sales would fare if fighting begins. War could cool consumer demand, but some see the economy as being in better shape than it was during the 1991 Gulf War.

"I think the situation (with Iraq) is making consumers nervous right now," Healy said. "But it doesn't show up in the sales numbers. You can't count the people who didn't go into the showrooms and stayed on the couch watching television instead."

In GM's report, the company said light truck sales dropped nearly 19 percent compared with the same month in 2002. This dragged on the world's No. 1 automaker's overall performance despite reporting car sales that increased 23 percent.

The company's Saab unit outperformed the company, showing sales up 62 percent compared with January 2002.

Incentives _ mostly financing deals and cash-back offers _ have fueled U.S. sales since September 2001, when GM launched its "Keep America Rolling" no-interest loans promotion to jump-start the industry. And the incentive battle doesn't appear to be easing.

Last week, Ford announced it was beefing up incentives on two of its SUVs as well as its Econoline and Club Wagon full-size vans. Ford said the deals were a direct result of GM's offerings, which included raising cash incentives on vehicles including the Chevrolet Tahoe and TrailBlazer.

On Tuesday, Chrysler is rolling out a new national marketing program scheduled to begin Tuesday called "The Best Values in America," emphasizing the company's 7-year/ 70,000-mile powertrain warranty and incentives. And the company said Monday it is tweaking its own incentive offerings.

Among the changes, Chrysler is adding $500 cash back on its Dakota and Heavy Duty Ram pickups, spokesman Marc Henretta said. Depending on where in the country the trucks are sold, consumers could get $2,500 to $3,000 back on the Dakota and $1,500 to $2,000 back on the Ram.

The changes come as the Chrysler Group of DaimlerChrysler AG reported both car and truck sales were off about 12 percent in January from a year ago. But the company noted gains in key models, including a 3 percent increase in sales of the Dodge Ram.

"We are pleased with the success Ram is having in the marketplace," said Gary Dilts, senior vice president for sales. "Our new Dodge Ram Heavy Duty … posted another strong month based on its solid product attributes and capability."

Volkswagen AG was among the European companies reporting a drop in sales, with its January performance off about 17 percent from January 2002. Toyota Motor Sales USA Inc. dragged on the Asian automakers with a 6 percent decline, but Honda's outperformed the industry.